Bank of England Rules ROE List

Ranking banks by assets, as Arkansas Business did in May, provides a good idea of the presence each bank has in the lending market. But if you want to know who is making money for stockholders most efficiently, ranking by return on equity is the way to go.

This week’s list ranks all 126 banks chartered in Arkansas by this key metric, in which 2012 net income is divided by shareholder equity.

The champ last year was Bank of England, which zoomed from No. 9 in 2011 to overtake a couple of perennial leaders, First Financial Bank of El Dorado and Riverside Bank of Sparkman.

Bank of England ended the year with $270 million in assets, putting it at No. 42 when Arkansas banks were ranked by assets. But its $8.52 million in profit last year calculates to an ROE of 31.34 percent. That was generated by a net gain of $60.3 million from the sale of loans, primarily through Eng Lending, a chain of 59 loan production offices in 26 states.

Get the List: Download the list of banks ranked by return on equity right here.

“We’ll probably grow 50 percent this year in terms of loan volume,” said Brad Canada, president of Eng Lending, told Arkansas Business earlier this year. “We’ll have 80 offices in 40 states by the end of the year.”

As impressive as it was, Bank of England’s ROE was lower than both First Financial and Riverside reported in 2011; both topped 34 percent that year. But like many other banks in the state, those two saw ROE dip in 2011.

First Financial, which ranked No. 12 by assets, was a distant second in ROE with a ratio of 22.85 percent.

Tiny Riverside Bank, just $55.25 million in assets at the end of 2012, ranked third with ROE of 20.02 percent. That was just an eyelash ahead of First Security Bank of Searcy, where the Rutledge family’s equity generated a 20.01 percent return of $98.37 million.

The average ROE for financial institutions insured by the Federal Deposit Insurance Corp. was 8.59 percent last year, and 59 Arkansas banks performed above that average last year.

By the first quarter of this year, the national average had improved to 9.95 percent.